Safe way to store large money in bank accounts?

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etsan's picture
etsan
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Joined: Apr 22 2009
Posts: 57
Safe way to store large money in bank accounts?

Hello,

How would someone go about storing a large amount of money into a bank account? What if I had to store $300,000 into an account. From my understanding, the FDIC only guarantees up to 250K per depositor correct? So would this mean that another account at a different bank should be opened to store the other 50K to be safe?

What if someone had $5 million? How would they store it? They can't be opening like 20 accounts at different banks to be FDIC safe, would they?

Thanks for the help.

LogansRun's picture
LogansRun
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Posts: 1443
Re: Safe way to store large money in bank accounts?

First scenario is exactly that....open two accounts with $150k in two different banks.

Second, you could put it all into a finance house as deposits and they give a certain account # to each.   This way much of it is covered.  If you had $5m though, it's smarter to put it into a trust of some sort and invest through that trust.  Really, all of those were what I would have done 3 years ago.   Now, my money is split between 11 Credit Unions, and in PM's.  It's that simple.

markf57's picture
markf57
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Posts: 62
Re: Safe way to store large money in bank accounts?

Technically, there are ways to keep more per institution if you are married, using personal and joint accounts, but in the current environment, I would spread them out as much as possible.

I've already had one of my banks fail and another is on the brink. FWIW, it was quite painless getting my money back from the failed institution.

 

Travlin's picture
Travlin
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Posts: 1322
Re: Safe way to store large money in bank accounts?

etsan

Banks and credit unions will have answers for your questions.  Here are sources so you can prepare.

The FDIC web site has a calculator -- https://www.fdic.gov/edie/index.html 

More FDIC info here -- http://www.fdic.gov/deposit/deposits/index.html

Confirm this yourself, but as I remember you are covered separately for your single account, your IRA, joint with spouse, joint with kid, joint with anyone really, a trust account, a business account, etc.  The critical factor is that the ownership is different, except for your IRA.  You can stack coverage very high this way.  Use another bank (not branch) and you start stacking all over again.  Given the shaky state of many banks, using more than one is safer.

The downside is the question of who owns the money if you die?  Be sure of who you are joint with and if they have right of survivorship or not.

Credit unions have a separate but equal deposit insurance system, and unlike the FDIC it is not broke.  They are usually more sound too.  http://www.ncua.gov/Resources/ShareInsurance/InsuranceEstimator.aspx 

http://www.ncua.gov/Resources/ShareInsurance/YourInsuredFunds.pdf

Remember the $250,000 limit is a TEMPORARY increase from $100,000 and expires Dec 31, 2013 unless Congress extends it..

For $5 million you can open an account at Charles Schwab.  They have a service where you can buy CDs online at high rates from multiple banks with FDIC insurance.  20 banks on one statement, no fuss.  Wish I had your problem. :)

 

etsan's picture
etsan
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Posts: 57
Re: Safe way to store large money in bank accounts?

Travlin and all,

Thanks for the info. But if I had $5 million, I don't think I would be that dumb to ask this question. I'm just trying to see what ways people use to store their money. I had a friend that had close to a million dollars in the bank, it was under their family or something in one account. When Indy Mac went bust in 08, they were only able to get their 100K and lost the rest. Don't know if they are able to chase the rest but thats the story I got. Sad.

SPAM_Bryan Carlson's picture
SPAM_Bryan Carlson
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Re: Safe way to store large money in bank accounts?

One of the options that you have is to buy bonds, they are known to be quite safe, the other suggestion I can share with you is to open a Swiss bank account. Swiss bank accounts offer you the strictest privacy, total safety and they are tax-free

ao's picture
ao
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Joined: Feb 4 2009
Posts: 2220
Re: Safe way to store large money in bank accounts?
Bryan Carlson wrote:

One of the options that you have is to buy bonds, they are known to be quite safe, the other suggestion I can share with you is to open a Swiss bank account. Swiss bank accounts offer you the strictest privacy, total safety and they are tax-free

Bryan,

You may want to specify what type of bonds.  Personally, I wouldn't touch most bonds with a ten foot pole.

Most importantly, Swiss bank accounts are increasingly attracting U.S. government attention like s*** attracts flies.  The Feds are going after holders of these accounts with a vengeance.  Furthermore, the Swiss have been pressured into gradually relinquishing some degree of privacy.  And most certainly, they are not tax free for U.S. citizens.  Failure to pay U.S. federal income tax on any interest generated from these accounts will secure one's future ... in a Federal penitentiary.  Unlike many other countries, U.S. citizens have to pay income tax on income, interest, dividends, etc. regardless of what country they are generated in and regardless of where the U.S. citizen is residing.  With IRS plans to hire 16,000 new agents, auditors, etc., rest assured, they will be gunning for anyone they feel is stepping over the line. 

TNdancer's picture
TNdancer
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Posts: 127
Re: Safe way to store large money in bank accounts?

Anyone sharp enough to accumulate 5 million is probably also sharp enough to know keeping it in any bank or spread of banks is foolish.  While the FDIC will ( most likely ) insure the return of it, the FED is working night and day to insure the purchasing power of it is reduced every day.

The sharp person would seek to place that "money" in something that would hopefully at least keep pace with the FED's plan of monetary destruction.

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